Tamilnad Mercantile Bank (TMB) has set up a transaction business group (TBG) to boost CASA deposits. The lender has been struggling to grow its low-cost deposit base over the last few quarters.
“CASA growth was practically flat for both year-on-year and quarterly basis, which is a great concern for us,” Salee S Nair, managing director and CEO, said during the third quarter earnings press conference on Thursday.
TMB on Wednesday reported a 6% rise in its Q3 net profit to ₹300 crore. While total deposits grew 8% YoY to ₹50,392 crore, CASA fell 1% to ₹13,788 crore, with growth being driven by high-cost term deposits, up 11% to ₹36,605 crore.
Nair said there has been an industry-wide shift from low-cost CASA to high-interest term deposits. The bank has launched the TBG and a global NRI centre earlier this month to help drive the CASA growth. “TBG’s mandate is to acquire current account customers, government accounts and large institutions. We aim to regain our lost presence in the mercantile space.”
TMB has also piloted a credit management centre in Tuticorin to build its credit portfolio, and let branches focus on the liability (deposit) growth. “Each of our 12 regions will have one CMC, covering about 50 branches,” Nair said, adding that McKinsey is advising on automating credit underwriting. These efforts are likely to start yielding results from H1FY26.
Gross advances grew 14% to ₹43,650 crore, led by a 35% jump in agriculture loans to ₹18,028 crore. Retail and MSME loans grew 1% and 5% to ₹8,550 crore and ₹13,751 crore, respectively. Within MSME, loans of ₹50 lakh and above rose 12% to ₹7,617 crore. “That segment is now our focus,” Nair said.
Retail, agri and MSME loans comprised 92.39% of total advances in Q3. Nair said the lender will not focus on non-RAM segments like corporate loans till internal systems and staff are equipped for corporate underwriting.
Shares of TMB closed down 1% at ₹425.5 on the NSE.